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CIRCULAR No

CIRCULAR No. 108/2000/TT-BTC OF OCTOBER 27, 2000 GUIDING THE REGIME OF FINANCIAL MANAGEMENT AT GUEST HOUSES OF STATE AGENCIES AND MASS ORGANIZATIONS AT THE CENTRAL LEVEL AND IN THE LOCALITIES

Pursuant to Decree No. 87/CP of December 19, 1996 of the Government on the assignment of responsibilities in managing, drawing up, implementing and settling the State budget, and Decree No. 51/1998/ND-CP of July 18, 1999 of the Government amending and supplementing a number of articles of the Government�s Decree No. 87/CP of December 19, 1996 detailing the assignment of responsibilities in drawing up, implementing and settling the State budget;

Pursuant to the Prime Minister�s opinions in Official Dispatch No. 1298/CP-KTTH of November 2, 1998 on converting the operation of guest houses and rest houses into business operation;

Pursuant to the Prime Minister�s opinions in Official Dispatch No. 664/CP-KTTH of July 18, 2000 on the activities of the guest houses directly under the provincial/municipal People�s Committees;

The Ministry of Finance provides the following guidance for implementation of the regime of financial management for a number of guest houses set up to serve activities of the Party, National Assembly and Government agencies as well as mass organizations at the central level and in the localities:

I. GENERAL PROVISIONS

1. Objects of application:

This Circular is applicable to:

- The guest houses under the Party Central Committee�s Commission for Finance and Administration, the Office of the National Assembly, the Office of the Government, the Central Committee of the Vietnam Fatherland Front and the Vietnam General Confederation of Labor.

- Each province or centrally-run city is allowed to keep a guest house to provide general service for the agencies of the Party, the administration and mass organizations of the locality (according to Official Dispatch No. 664/CP of July 18, 2000 of the Government on the activities of the guest houses attached to the provincial/municipal People�s Committees.

2. The main task of the guest houses is to provide lodging and meeting place for officials of the Party, National Assembly and State agencies as well as mass organizations at the central level and in the localities who come on work mission.

3. Apart from the assigned political task, the guest houses are entitled to make the most of the existing material and technical facilities and labor force to organize income-generating service activities and to ensure that these activities are efficient, law abiding and do not affect the assigned political task.

4. The guest houses shall have to manage and effectively use the material and technical facilities assigned to them and fulfill the tax payment obligations to the State.

II. SPECIFIC PROVISIONS

1. On the regime of managing revenues and expenditures of the service and business activities:

1.1. The revenues of the guest houses include:

- Rental of bedrooms.

- Rental of meeting rooms.

- Commissions from telephone service.

- Revenues from catering service, organization of weddings, birthday parties, festivities...

- Revenues from other business and service activities.

The guest houses must draw up the rent rates for bedrooms and meeting rooms and submit them to the controlling agency for approval as basis for implementation. The room rates shall be formulated on the following principles:

- The rent rates for bedrooms applied to the guests being State officials and public servants and other guests are based on the political tasks assigned to them, with the maximum rate not exceeding the work mission allowances under the current regime.

- The rent rates for meeting rooms and service charges for the administrative and non-business agencies funded by the State budget should receive preference over the market rates.

- The rent rates for rooms and service charges for other subjects shall follow the existing market rates of the same service quality.

1.2. The expenditures include:

a/ Wages and wage allowances for officials and employees, labor contract and overtime work payment: The guest houses must draw up plans of labor and wages and submit them to the heads of the controlling agencies for approval as basis for implementation.

Depending on the results of the service activities the guest houses can choose one of the following two forms of wage payment:

- For the guest houses which can cover the expenditures for all their regular activities: The heads of the units are allowed to apply the mode of wage payment as for the State enterprises: on the basis of the method of calculating the unit price of wages on the total turnover stipulated in Item c, Point 3, Section III of Circular No. 13/ LDTBXH-TT of April 10, 1997 of the Ministry of Labor, War Invalids and Social Affairs guiding the method of calculating the unit price of wages and management of wages at State enterprises, they shall calculate the wage funds of the guest houses and determine the rates of contracting the wage fund on the service turnover and submit it to the higher controlling agencies for decision.

- For the guest houses which can assure part of the expenditures on regular activities, the wage payment to the laborers shall be conducted according to the existing grade wages and posts with regard to the administrative and non-business units.

b/ Payment of social insurance and health insurance premium, deduction to pay trade union fees, job severance allowances for laborers according to the State�s prescriptions.

c/ Payment for services bought from outside such as electricity, water, telephone, small repairs, purchase of small labor implements, maintenance of machinery and equipment.

d/ Expenditures for the purchase of raw materials, fuel and materials in service of the guests.

e/ Deduction for depreciation cost of fixed assets distributed into business and service expenditures on the basis of the time amount, the use frequency of the fixed assets for business and service activities. The deduction for depreciation cost shall comply with Decision No. 351-TC/QD/CDKT of May 22, 1997 of the Ministry of Finance on the issuance of the regime of management, use and depreciation calculation of fixed assets at the administrative and non-business units.

In case the unit wants to deduct depreciation cost other than stipulated at Appendix No. 01 to Decision No. 351-TC/QD/CDKT of May 22, 1997 of the Ministry of Finance or if the fixed assets are not yet stipulated in the Appendix, it shall record in writing the criteria used as basis to determine the use time of these fixed assets and shall have to submit them to the direct managing financial agency for consideration and decision.

f/ Expenditures on advertisement, marketing, sale promotion, reception, protocol, transaction, external relations, conferences and other expenditures must be associated with the business results and must not exceed the levels prescribed in Clause 11, Part III of Circular No. 99/1998/TT-BTC of July 14, 1998 of the Ministry of Finance guiding the implementation of Decree No. 30/1998/ND-CP of May 13, 1998 of the Government detailing the implementation of the Law on Enterprise Income Tax: For catering and service business activities, these expenditures in the first two years after establishment shall not exceed 7% of the total expenditures already inventorized (minus the purchasing price of the sold commodities) and later not exceed 5% of the total expenditure already inventorized (minus the purchasing price of the sold commodities).

The above expenditures must keep strictly to the current prescriptions of the State on the regime of receipts and vouchers.

g/ Expenditures on payment of taxes to the State budget:

Guest houses shall have to register and make declarations to pay value added tax, the enterprise income tax and other duties (if any) as prescribed by law.

Proceeding from the main task of the guest houses, which is to provide lodging and meeting place for guests who are officials of the Party, National Assembly and Government agencies as well as mass organizations of the center and in the localities, in order to simplify the account settlement, the guest houses are allowed to apply the method of paying the value added tax and the enterprise income tax according to a contractual percentage of the income. The concrete contractual amount of tax to be paid annually by each guest house shall be determined by the Tax Service of the province or centrally-run city where the guest house is located. When making up the receipt for collection of payment of the services at the guest houses, the pre-VAT prices and the VAT prices must be recorded as prescribed.

2. Regime of management of expenditures covered by the State budget

To create conditions for the guest houses to carry out their assigned tasks, the State budget shall support the guest houses to cover a number of expenditures as follows:

- The State budget shall supply the capital for investment in capital construction and purchase of initial fixed assets of the guest houses according to the plan approved by the competent authority and to the annual draft budget.

- The guest houses are allowed to retain the basic depreciation cost of the fixed assets belonging to the State budget source of capital already invested in order to supplement the construction investment fund used to repair and purchase fixed assets of the guest houses on the basis of the plan approved by the higher managerial agency.

3. On the distribution of results of the activities:

The revenues of the guest houses, after deduction of reasonable expenditures and payments to the State budget as prescribed, shall be distributed as follows:

- For the establishment of the business and service development fund: 35%

- For the welfare and reward funds: 65%

The highest rate of deduction to set up the reward and welfare funds of a guest house shall not exceed the actually paid 3-month wages; the remainder (if any) shall be supplemented to the fund of investment for material bases and development of business and service of the guest house or shall be transferred to the higher managerial agency. The level of supplement and transfer shall be decided by the higher managerial agency.

4. On the organization of account settlement, accountancy and the regime of financial management:

4.1. The guest house shall organize the apparatus of accountancy, account settlement, use of the accounting books, forms, accounts... according to the provisions of Decision No. 999/TC/QD-CDKT of November 2, 1996 of the Minister of Finance on the issuance of the regime of accountancy at administrative and non-business units, and supplementary guiding documents.

4.2. Each year, the guest house shall have to draw up the financial plan and the draft income and expenditure as currently prescribed by the State, and report to the controlling agency so that the latter may integrate them into its annual draft budget to be sent to the Ministry of Finance (for the guest houses belonging to the central agencies) and to the provincial/municipal Finance and Price Service (for the guest houses of localities).

4.3. The guest house shall have to draw up a report on the implementation of the plan, and account settlement every three months, six months and yearly, and send them to the controlling agency. The controlling agency shall have to check and approve the annual account settlement, make a sum-up thereof and send it to the Ministry of Finance or the Finance and Price Service under the current regime of statistics and accountancy.

III. ORGANIZATION OF IMPLEMENTATION

1 The stipulations in this Circular take effect as from January 1st, 2000.

2. In the course of implementation, should any difficulties arise, they should be reported to the Ministry of Finance for consideration and appropriate supplement.

For the Minister of Finance

Vice Minister
PHAM VAN TRONG